Taliwang Property
Effectively from the last Contract of Work (“CoW”) meeting in Bali on June 13, 2008 all outstanding negotiating points had been agreed upon. To finalize the CoW document it just required a series of interdepartmental meetings between selected members of the negotiating team and representatives from the Central Government to update relevant legislative points. To speed-up the process ESDM (Department of Energy and Mineral Resources) invited team leaders from all of the CoW negotiating teams from the four applicant companies (BHP-Antam, East Asia Minerals, Barrick & Indotan) to attend such a meeting on July 21, 2008, but it was postponed at the last moment because of senior personnel changes in ESDM.
A meeting was held yesterday (August 5, 2008) between ESDM personnel and CoW applicants to discuss the status of their CoW applications, along with the possibility of minor revisions in line with the impending new Mining Law. When asked when the new Mining law would be finalized dates ranged from the end of August through to the end of 2009. Pretty typical!
The following are the main points from yesterdays meeting:
- Intergovernmental checks: written replies have been received from all relevant central government Departments, aside from the Department of Forestry. The main issue appears to be the right at any time of the Forestry Department to change the status of designated forestry areas. An example of this problem is the Sorikmas Project in North Sumatra , where designated Protected Forestry within an existing CoW area was proposed to be changed to National Park status. This problem has yet to resolved after 2.5 years of arbitration. CoW applicant’s position to date has been that forestry status cannot be changed once the CoW document has been signed, unless both parties agree to the changes. ESDM position has been that any proposed forestry changes would have to be ratified by them.
- CoW applications to a maximum of 100,000 Ha. Currently a single CoW application can be in excess of 250,000 Ha.
- A maximum of 25,000 Ha permitted for exploitation in the Operating/Production Period. Currently the maximum figure is 62,500 Ha.
- Revision of the Operating/Production Period from 30 years + 2 x ten year extension periods = 50 years total , to 20 years + 2 x ten year extension periods = 40 years total
Whilst the Forestry issue is still pending the proposed changes in points 2-4 are considered acceptable and this was conveyed by all groups except BHP-Antam. Because their CoW application is for nickel laterite and the associated huge upfront capital costs in a production scenario they requested the older Operating/Production Period timeline be continued.
On the basis of verbal agreements by 3 of the 4 CoW applicants to the above changes, ESDM in conjunction with applicants will modify their current CoW drafts, so that next week the postponed July 21, 2008 meeting can be realized. In all likelihood the CoW document will be finalized and initialed this month.
One point of interest was that the IndoMines CoW ( Central Java beach sand project) would be signed this month.
Best wishes
Soccer